10 March 2021

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Rebecca Storen
Social Policy Section

This quick guide provides an overview of the Royal Commission into Aged Care Quality and Safety (the Royal Commission). It is the second of the Parliamentary Library’s quick guides on the Royal Commission (the first was published in 2019), and focuses on the Commissioners’ recommendations for a new aged care system in the Final Report, released on 1 March 2021. It is intended to assist with understanding the key recommendations and does not include additional commentary. It provides some background information on the establishment and earlier work of the Royal Commission, including its Interim Report.

This quick guide focuses on four of the fundamental elements that the Commissioners recommend to comprehensively reform the aged care system:

• developing a new aged care Act, using a rights-based approach
• enhancing aged care governance, including new independent oversight
• ensuring care is safe and of high quality and
• financing an entitlement to high quality care based on need.

Background

Royal Commission established

On 8 October 2018, the Governor-General issued the Letters Patent establishing the Royal Commission into Aged Care Quality and Safety (the Royal Commission). The Letters Patent outlined the key areas of inquiry and appointed two Royal Commissioners: Justice Joseph McGrath (Chair) and Ms Lynelle Briggs. The Letters Patent were revoked and replaced on 6 December 2018, following the resignation of Justice McGrath, to appoint Richard Tracey QC as Chair. The Letters Patent required the Final Report to be delivered by 30 April 2020.

On 13 September 2019, amended Letters Patent were issued, extending the delivery date of the Final Report to 12 November 2020 and appointing a third Commissioner, Gaetano (Tony) Pagone QC. Commissioner Tracey and Commissioner Briggs prepared the Interim Report, which they finalised in late September 2019. Commissioner Tracey died on 11 October 2019. Commissioner Briggs presented the Interim Report to the Governor-General on 31 October 2019.

On 25 June 2020, the Governor-General issued further amending Letters Patent that confirmed Commissioner Pagone as Chair of the Royal Commission and extended the delivery date of the Final Report to 26 February 2021.

Interim Report: Neglect

The Interim Report of the Royal Commission covered most of the work undertaken by the Royal Commission to September 2019. It states on page 12 of Volume 1:

… the system designed to care for older Australians is woefully inadequate. Many people receiving aged care services have their basic human rights denied. Their dignity is not respected and their identity is ignored. It most certainly is not a full life. It is a shocking tale of neglect.

The report comprises three volumes:

• Volume 1 contains key information about aged care and the Commissioners’ initial conclusions
• Volume 2 contains overviews of the hearings and findings from case studies and
• Volume 3 contains appendices, including summaries of the nine community forums.

Volume 1 is divided into three parts. The first part describes the current aged care system. The second part tells the story of the people who use the system. Part 3 presents what the Commissioners have called the inconvenient truths about the aged care system in five chapters:

• Finding the Door explores the challenges people experience in seeking information about the aged care system, what may be available to them and how to access it.
• The Lottery looks at the establishment and management of the waiting list for home care.
• Elders are our Future details experiences and challenges in providing culturally appropriate, safe and quality aged care to Aboriginal and Torres Strait Islander people.
• Restrictive Practices explores the use of physical and chemical restraints, including to pacify people living in residential aged care.
• Falling Through the Gaps describes the experience of younger people who have been forced into residential aged care because there is nowhere else for them to live.

The Commissioners identified three areas for urgent action:

• provide more home care packages to reduce the waiting list for higher level care at home
• respond to the significant over-reliance on chemical restraint in aged care and
• stop the flow of younger people with disability going into aged care, and expedite the process of finding alternative housing options for those younger people already in aged care.

Government response

On 25 November 2019, the Australian Government announced a $537 million package in response to the three priority areas identified in the Interim Report, comprising:

• an additional 10,000 home care packages
• improvements to medication management programs to reduce chemical restraint, and new restrictions and education for prescribers on the use of medication as a chemical restraint
• additional dementia training and support for aged care workers and providers and
• investment to help meet revised targets under the Younger People in Residential Aged Care Action Plan, with no people under the age of 65 living in residential aged care by 2025.

Special report into COVID-19

In late April 2020, the Royal Commission called for submissions on the impact of the COVID-19 pandemic on the aged care sector. In May, the Commissioners raised concerns about the reports of deaths in residential aged care due to COVID-19. In August, the Royal Commission held hearings into the response to COVID-19 in aged care.

On 1 October 2020, the Commissioners handed their special report into the impact of the
COVID-19 pandemic in aged care to the Governor-General. The report focused on four key areas: visitors and quality of life; allied health; national advisory body and plan; and infection control expertise and personal protective equipment. It made six recommendations, including that the Australian Government report to Parliament on its implementation of the recommendations no later than 1 December 2020. The recommendations called for immediate action by the Australian Government to:

• make funding available, through application, to providers to ensure adequate staffing to allow continued visits from family and friends for people living in residential aged care
• create Medicare Benefit Schedule items to increase the provision of allied health services for people living in residential aged care
• publish a national aged care plan for COVID-19 and establish a national aged care advisory body and
• arrange with states and territories to deploy accredited infection prevention and control experts to residential aged care.

Government response

On 1 October 2021, the Minister for Aged Care and Senior Australians, Richard Colbeck, welcomed the special report, stated that the Government accepted all six recommendations, and provided an update on activities already underway in line with the recommendations.

On 30 November 2020, the Australian Government tabled a progress report on its implementation of the recommendations of the special report. Of the six recommendations, three had been delivered and three were in progress.

Counsel Assisting’s final submissions

In the final hearing of the Royal Commission, Senior Counsel Assisting presented submissions on behalf of the Counsel Assisting team, including their recommendations for consideration by the Commissioners. The Royal Commission invited submissions on the Counsel Assisting’s final submissions and released a selection of the submissions it received in February 2021.

Final Report: Care, Dignity and Respect

The Commissioners presented the Final Report to the Governor-General on 26 February 2021. Over the course of the 28 months of work, the Royal Commission held 23 public hearings involving 641 witnesses, and received over 10,500 public submissions. The Final Report was released by the Government alongside its initial response to the Final Report on 1 March 2021. In addition, the Government tabled the three-volume Independent Review of Legislative Provisions Governing the use of Restraint in Residential Aged Care (December 2020).

The Final Report comprises five volumes (over eight separate publications):

• Volume 1 provides a summary and the recommendations
• Volume 2 describes the current aged care system
• Volume 3 (3A and 3B) sets out the Commissioners’ proposals for the future of aged care
• Volume 4 (4A, 4B and 4C) provides the hearing overviews and case studies and
• Volume 5 contains the appendices.

The Final Report recommends a fundamental and systemic shift in aged care, and provides 148 recommendations intended to achieve this. Recommendation 145 is that the Australian Government report to Parliament on its response to each recommendation in the Final Report by 31 May 2021.

Systemic problems with the aged care system identified by the Commissioners include ‘inadequate funding, variable provider governance and behaviour, absence of system leadership and governance, and poor access to health care’ (Vol. 1, p. 73). The Commissioners found that these systemic problems have occurred under successive Australian governments:

The Minister and the Department (and their predecessor Ministers and Departments) have over many years had the means available to achieve effective leadership of the aged care system, but failed to do so. The Australian Government has been the dominant funder of aged care services, but it has not funded the system adequately. It has been in a position to create mechanisms for measuring performance of the aged care system and identifying areas for improvement. It has been responsible for design of an effective regulatory system. It has failed to discharge these responsibilities adequately. (Vol. 1, p. 82)

The Commissioners argued that ‘significant change’ is required, as:

The delivery of aged care in Australia is not intended to be cruel or uncaring. Many of the people and institutions in the aged care sector want to deliver the best possible care to older people, but are overwhelmed, underfunded or out of their depth. (Vol. 1, p. 78)

Volume 3: the new system

Volume 3 sets out the Commissioners’ ‘vision for the future of aged care in Australia’. It notes that ‘while many of the recommendations and observations [made] are joint’, ‘there are instances where we make differing observations and recommendations which are contained, in some cases, in separate chapters on the same topic’. As such, Volume 3 comprises 26 chapters, 15 prepared jointly, and 11 separately (six by Commissioner Briggs and five by Commissioner Pagone). Appendix A provides a breakdown of the recommendations by Volume 3 chapter and degree of agreement between Commissioners.

Foundations of the New Aged Care System (Chapter 1)

The Final Report makes recommendations to fundamentally change the existing aged care system, with the reforms being based on entitlement to the supports and services each individual needs. The Commissioners recommend a new, rights-based Act that articulates a revised purpose of the new system to replace the existing Aged Care Act 1997 (Cth). The purpose is stated in Volume 3A:

The purpose of the aged care system must be to ensure that older people have an entitlement to high quality aged care and support and that they must receive it. Such care and support must be safe and timely and must assist older people to live an active, self-determined and meaningful life in a safe and caring environment that allows for dignified living in old age. (Vol. 3A, p. 14)

The Commissioners propose a new definition of aged care and objects that is significantly different to the existing Aged Care Act 1997 (partially outlined in Table 1 below).

Table 1: definition of aged care and the first object of the existing Aged Care Act 1997 and the proposed new Act

Existing Aged Care Act 1997	Proposed Act (Recommendation 1)
aged care means care of one or more of the following types: (a) residential care; (b) home care; (c) flexible care.	2. The new Act should define aged care as: a. support and care for people to maintain their independence as they age, including support and care to ameliorate age-related deterioration in their social, mental and physical capacities to function independently b. supports, including respite for informal carers of people receiving aged care.
1) The objects of this Act are as follows: a) to provide for funding of *aged care that takes account of: i) the quality of the care; and ii) the *type of care and level of care provided; and iii) the need to ensure access to care that is affordable by, and appropriate to the needs of, people who require it; and iv) appropriate outcomes for recipients of the care; and v) accountability of the providers of the care for the funding and for the outcomes for recipients; [asterisks are used to identify terms that are defined in the Aged Care Act 1997]	3. The objects of the new Act should be to: a. provide a system of aged care based on a universal right to high quality, safe and timely support and care to: i. assist older people to live an active, self-determined and meaningful life, and ii. ensure older people receive high quality care in a safe and caring environment for dignified living in old age

The Commissioners recommend a list of rights for older people seeking and receiving aged care (set out in Recommendation 2) be included in the new Act. The Commissioners do not propose these rights be separately and directly enforceable in the courts, with one exception regarding freedom from restraints. Rather, ‘they should be seen as aspects of a general duty to provide high quality care imposed by the new Act on approved providers’ (Vol. 3A, p. 19).

Recommendation 3 of the Final Report outlines new key principles that would guide the administration of a new Act.

Chapter 1 concludes by calling for the integration of long-term supports and care for older people, with a focus on the person rather than a specific system to help people age well. This would involve state and territory governments and touch on areas such as housing, health, retirement income and welfare support, as well as aged care.

Governance of the New Aged Care System (Chapter 2)

The Final Report notes that the aged care system has been ‘under prolonged stress and has reached crisis point’, with the COVID-19 pandemic highlighting the ‘weaknesses and shortcomings in the system’, especially with regards to its governance (Vol. 3A, p. 37).

The Commissioners recommend there should be new and robust governance arrangements, ‘including through independent examination of costs and prices, advisory mechanisms to ensure that older people have an effective voice, and high level review and evaluation’ (Vol. 3A, p. 40). However, they respectively propose two different governance structures for the new aged care system, summarised in Table 2 below. Commissioner Pagone recommends the establishment of two new, fully independent statutory agencies that would lead and govern the aged care system and be free from ministerial direction. Commissioner Briggs recommends changes to existing agencies. Both Commissioners recommend the establishment of an independent office of the Inspector-General of Aged Care that would ensure ongoing scrutiny of the aged care system.

Table 2: proposed governance arrangements for the new aged care system from Commissioner Pagone (Independent Commission model) and Commissioner Briggs (Government Leadership model)

Source: Royal Commission into Aged Care Quality and Safety (Royal Commission), Final Report Volume 3A, Royal Commission, p. 4.

Quality and Safety (Chapter 3)

The Final Report found that substandard care can occur in both routine areas of care (for example, skin care and food) and in complex care (for example, management of chronic disease and palliative care) (see p. 68 of Vol. 1). It also found that the Aged Care Act 1997 does not include a clear explanation of the basic responsibility of approved providers to ensure the care they provide is safe and of a high quality. The Commissioners recommend a definition of high-quality aged care that puts older people first and includes a general duty on approved providers to ensure, as far as reasonable, the safety and quality of its services (Vol. 1, p. 91).

While noting there are ‘pockets of excellence’ in the system, the Final Report identifies four areas in need of immediate attention: food and nutrition; care and support for people living with dementia; elimination and reduction of restrictive practices; and palliative care. The Commissioners’ recommendations include some which are focused on specific areas, such as Recommendation 17 on the regulation of restraints, and some which are broader, such as Recommendation 19 which recommends an urgent review and possible amendment of the Aged Care Quality Standards that would include focusing on palliative care in residential aged care.

The Commissioners recommend the setting of future aged care quality standards should be an expanded function of a renamed Australian Commission on Safety and Quality in Health and Aged Care. The Commissioners recommend that the renamed Commission undertakes an urgent review into the existing Aged Care Quality Standards introduced in 2019, with the review being referred by the 15 July 2021 and due to report no later than 31 December 2022.

The Final Report notes it is difficult to measure quality in the existing system and recommends three interlinked elements to provide a comprehensive approach to quality measurement and reporting:

• the implementation and amendment of the existing aged care quality indicators, as well as the development of quality indicators for care at home
• the implementation of reporting and benchmarking of approved provider performance against the quality indicators, which would include public reports on sector and provider performance and
• the introduction of a star rating system, which would be informed by information from older people, serious incident reports data, complaints data, benchmarking performance and current and previous assessments by the Quality Regulator. The Commissioners recommend this should be implemented by 1 July 2022.

Financing the new aged care system (Chapters 20 and 25)

In 2019–20, the Australian Government spent $21.2 billion on aged care programs, which was predominantly administered by the Department of Health. In 2018–19, the Australian Government spent $19.9 billion. Of this, $13.0 billion was spent on residential care, with the resident contribution being another $4.8 billion. The Commissioners raised concerns that despite this expenditure, the system is still unable to consistently deliver safe and quality services, with the Final Report stating:

Funding for aged care is insufficient, insecure, and subject to the fiscal priorities of the Australian Government of the day. For several decades, one of the priorities for governments dealing with the aged care system has been to restrain the growth in aged care expenditure in light of demographic changes. This priority has been pursued irrespective of the level of need for care, and without sufficient regard to whether the funding is adequate to deliver high quality and safe care. The consequence of these funding arrangements for older people is that they may not be able to access care when they need it due to rationing of services, and when they do access care, funding may not be sufficient to meet the cost of providing the high quality care they need. The current state of Australia’s aged care system is a predictable outcome of these measures to limit expenditure and ignore the actual cost of delivering aged care. (Vol. 1, p. 74)

While both Commissioners support the consideration of a new levy on taxable income to fund the aged care system, they differ on how to best approach the design of a levy.

Commissioner Pagone’s proposed approach (Chapter 20)

Commissioner Pagone states that ‘the aged care system needs a financing source that is as predictable, reliable, objective, and economically sound as possible, without compromising on the quality and safety of aged care or the equity of financing arrangements’ (p. 767). He details these requirements, along with the need for accountability and transparency, in six principles. To achieve the optimal balance of these principles, he states:

… I envisage a greater role for contribution by each person toward the financing of the aged care system through that person’s working life, and a greatly diminished or non-existent role for mandatory means tested co-payments by people when they are receiving aged care later in life. As I explain in more detail below, through the tax system people will have contributed to financing the aged care system in accordance with their income over their entire lives, and so should not be required to pay a means tested co-payment if and when they need aged care. (Vol. 3B, p. 768)

Commissioner Pagone proposes a hypothecated Aged Care Levy and recommends the Australian Government refer an inquiry to the Productivity Commission into the potential benefits and risks of adopting a levy through the taxation system.

Commissioner Pagone provides illustrative calculations to demonstrate how the aged care system could be financed through a levy. Modelling for the proposed new aged care system includes different Aged Care Levy values depending on whether the system is solely funded through taxable personal income (‘Gross Levy’); whether the Aged Care Levy would be used to make up the difference between the current government funding and the funding required for the new system (‘Net Levy’); and if only 52 per cent of additional costs were met by personal income taxpayers (‘Alternative Net Levy’) (outlined in Table 3). These scenarios are designed to be progressive rather than using a flat rate.

Table 3: modelling on three reformed aged care scenarios: Aged Care Levy rates by personal income threshold and proposed additional marginal tax levy

Maximum income threshold	Gross levy (%)	Net levy (%)	Alternative net levy (%)
$18,200	0.0	0.0	0.0
$37,000	Up to 4.4	2.3	1.2
$87,000	7.6	3.9	2.1
$180,000	8.7	4.5	2.3
Greater than $180,000	10.5	5.5	2.8

Source: Royal Commission into Aged Care Quality and Safety (Royal Commission), Final Report Volume 3B, Royal Commission, pp. 788–9.

Commissioner Briggs (Chapter 25)

Commissioner Briggs does not consider it necessary to refinance the whole aged care system but rather focuses on how to finance the increased costs that would be incurred through the implementation of the Royal Commission’s recommendations. Under this approach, the Government would continue to finance aged care services through general revenue and providing additional funds to cover system enhancements, with people receiving aged care services to continue to contribute to accommodation and other services as their means permit. As such, Commissioner Briggs recommends an ‘earmarked’, non-hypothecated, Medicare-style levy be introduced, which she proposes would be a flat rate of one per cent of taxable personal income.

Government response

In the press conference held on 1 March 2021 to announce the release of the Final Report and the Government’s initial response, the Prime Minister stated ‘the full response to the 148 recommendations [will] come during the course of the Budget process’, with the Government agreeing to consider the introduction of a levy.

The Government’s initial response announced a $452.2 million package under five broad pillars intended to underpin its continuing response and implementation:

• home care
  • over $18 million to enhance oversight of the Home Care Packages Program
• residential aged care quality and safety
  • $32 million to enhance the capacity of the Aged Care Quality and Safety Commission (ACQSC) and increase regulation around restraints in care, including through the appointment of a new Senior Restraint Practitioner, with the intent to bring practice into line with the disability sector, and enabling eligible providers to access programs to build their corporate and clinical governance
• residential aged care services and sustainability
  • $189.9 million for residential care providers to provide stability and maintain services
  • $90 million to support a viability fund for residential providers facing financial challenges
• workforce
  • $92 million to create over 18,000 places for personal care workers up to mid-2023
• governance
  • appointment of an Assistant Commissioner for Sector Capability in the ACQSC
  • $30.1 million to strengthen legislative governance obligations and provider governance and
  • work to commence immediately on replacing the Aged Care Act 1997.

Appendix A

A summary of the Royal Commission’s Final Report recommendations by chapter and degree of agreement between Commissioners

Chapter title (Recommendation reference)	Number of recommendations
	Joint	Joint but expanded upon by single commissioner (reference)	Single commissioner (reference)
Volume 3A
1. Foundations of the New Aged Care System (Recommendations 1 to 4)	4	-	-
2. Governance of the New Aged Care System (Recommendations 5 to 12)	1	-	7 (5 to 11)
3. Quality and Safety (Recommendations 13 to 24)	11	1 (24)	-
4. Program design (Recommendations 25 to 41)	13	2 (28 and 38)	2 (27 and 29)
5. Informal carers and volunteers (Recommendations 42 to 44)	2	-	1 (43)
6. Aged care accommodation (Recommendations 45 and 46)	1	1 (46)	-
7. Aged care for Aboriginal and Torres Strait Islander People (Recommendations 47 to 53)	7	-	-
8. Aged care in regional, rural and remote areas (Recommendations 54 and 55)	2	-	-
9. Better access to health care (Recommendations 56 to 71)	15	1 (56)	-
10. Aged care for older people with disability (Recommendations 72 and 73)	2	-	-
11. Younger people in residential aged care (Recommendation 74)	1	-	-
12. The aged care workforce (Recommendations 75 to 87)	8	4 (76 to 79)	1 (87)
Volume 3B
13. Provider governance (Recommendations 88 to 91)	3	-	1 (89)
14. Quality regulation and advocacy (Recommendations 92 to 106)	14	-	1 (105)
15. Research and development and aged care data | Commissioner Pagone (Recommendations 107 and 108)	-	2 (107 and 108)	-
16. Data, Research, Innovation and Technology | Commissioner Briggs (Recommendation 109)*	-	-	1 (109)
17. Funding the aged care system | Commissioner Pagone (Recommendation 110 to 129)	14	4 (112, 115, 117 and 124)	2 (128 and 129)
18. Capital financing for residential aged care | Commissioner Pagone (no recommendations)	-	-	-
19. Prudential regulation and financial oversight | Commissioner Pagone (Recommendation 130 to 137)	8	-	-
20. Financing the new aged care system | Commission Pagone (Recommendation 138)	-	-	1 (138)
21. Funding the aged care system | Commissioner Briggs (Recommendation 139)*	-	-	1 (139)
22. Personal contribution and means testing | Commissioner Briggs (Recommendation 140 and 141)*	-	-	2 (140 and 141)
23. Capital financing for residential aged care | Commissioner Briggs (Recommendation 142)	-	-	1 (142)
24. Financial oversight and prudential regulation | Commissioner Briggs (Recommendation 143)*	-	-	1 (143)
25. Financing the new aged care system | Commissioner Briggs (Recommendation 144)	-	-	1 (144)
26. Oversight, implementation and monitoring (Recommendations 145 to 148)	2	-	2 (146 and 147)

* earlier recommendations also repeated in this chapter

 

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